By Vas Papadopoulos, Principal Consultant, HR Excellence Partners

Quick answer: The new financial year is the natural trigger point for an Australian SME to reset its HR foundations. From 1 July 2026, modern award minimum wages rose 4.75% and the National Minimum Wage rose to $26.44/hour; meaning every award-covered employer needs to check their pay rates are still compliant [1][2].

At the same time, Victoria’s new psychosocial health regulations, which commenced 1 December 2025, mean Victorian employers now carry a positive legal duty to identify and control mental health risks at work, not just physical ones [3][4].

A 90-day plan covering policies, contracts, role clarity, psychosocial risk, leadership check-ins and a culture pulse survey is the cheapest way to close that gap before it becomes a claim, a dispute, or a regulator visit.

What’s actually changed for SMEs this financial year?

Two things landed at once, and together they change the compliance baseline for every Australian small business:

• Pay rates increased from 1 July 2026. The Fair Work Commission’s 2026 Annual Wage Review lifted modern award minimum rates by 4.75% and the National Minimum Wage by roughly 6%, taking it above $1,000 a week for the first time [1][2]. The new rates apply from your first full pay period on or after 1 July 2026.
• Victoria introduced a new psychosocial safety duty. The Occupational Health and Safety (Psychological Health) Regulations 2025 commenced 1 December 2025, requiring Victorian employers to proactively identify and control psychosocial hazards – bullying, excessive workload, poor role clarity, poor change management – the same way they’ve always had to manage physical hazards [3][4].

If your policies, contracts and risk registers haven’t been touched in the past 12 months, both of these changes have probably already outdated something in your business.

Why is 1 July the right time to do this, not just a tax deadline?

Because it’s the one date every SME owner already blocks out for a business review. Piggybacking an HR reset onto your existing EOFY routine means it actually gets done – instead of being the thing that only gets attention after an incident.

The 90-day plan: what should SMEs review, in what order?

Days 1–30: Get the paperwork right

Do your policies still reflect the law and how you actually operate?

Pull out anything untouched in the last 12 months. An outdated policy is worse than no policy — it creates a gap between what you say you do and what you actually do, which is exactly what a Fair Work Ombudsman review or unfair dismissal claim will test [5].

Are your employment contracts still compliant?

Fixed-term rules, casual conversion pathways, and the “right to disconnect” have all changed materially in the past two years – small businesses only became subject to the right to disconnect from 26 August 2025 [6]. If your standard contract template predates these changes, you’re carrying legal risk. Check termination clauses, casual/fixed-term terms, and pay rates against the new 1 July award minimums.

Do your position descriptions match what people are actually doing?

Misaligned PDs make performance conversations harder, complicate award classification, and are a named psychosocial hazard in their own right – low role clarity is explicitly listed as a risk factor under Victoria’s new regulations [7].

Days 31–60: Address the people-risk layer

Is your psychosocial risk register still accurate?

For Victorian employers this is no longer optional best practice; it’s a regulatory expectation. National data shows why it matters: mental health conditions now account for 12% of all serious workers’ compensation claims, up 14.7% in a single year and 161% over the past decade, with a median 35.7 weeks lost from work – nearly five times longer than other serious injury claims [8]. The most common reported causes are workplace bullying and harassment, work pressure, and exposure to violence or aggression [8][9]. A live risk register, reviewed against real triggers – organisational change, incident reports, HSR requests – is your primary evidence of compliance [4][10].

Are your managers actually checking in?

Most psychosocial hazards – poor support, unclear expectations, unmanaged workload – surface first in the relationship between a worker and their direct manager. A simple, consistent 1:1 cadence is one of the cheapest control measures available, and it doubles as an early warning system before issues escalate into claims.

Days 61–90: Test what you’ve built

Has any of this actually landed with your team?

A short, anonymous pulse survey validates whether your policy and contract updates changed anything for real, and gives you contemporaneous evidence that you’re monitoring psychosocial risk – something the Victorian Compliance Code specifically expects when circumstances change or new information comes to light [4].

Why is this “the cheapest insurance an SME owner can buy”?

Because the alternative is expensive. A focused 90-day review costs a fraction of what a single underpayment remediation, unfair dismissal claim, or WorkSafe investigation costs – both financially and in leadership time.

With mental health claims now the fastest-growing, most costly category of workplace injury in Australia, and Victorian regulators actively looking for evidence of “robust steps” since 1 December 2025 [3][8], a documented, current HR foundation is genuinely the cheapest risk-management spend on your desk this quarter.

Frequently asked questions

Do I need to update employment contracts for FY27? If your template predates August 2025, yes. The right to disconnect now applies to small businesses, and fixed-term/casual conversion rules have changed [6]. At minimum, check pay rates reflect the 1 July 2026 award increases [1].

Does the Victorian psychosocial regulation apply to my small business? Yes. The Occupational Health and Safety (Psychological Health) Regulations 2025 apply to all Victorian employers regardless of size, with no transitional exemption period [3][4].

What’s the cheapest first step if I can only do one thing this quarter? Start with the policy and pay rate review (Days 1–30). It’s the fastest to complete and closes the most immediate legal exposure.

How often should a psychosocial risk register be updated? Whenever there’s organisational change, a psychological injury or hazard is reported, a notifiable incident occurs, or existing controls stop working – not on a fixed annual schedule [4][10].

How HR Excellence Partners supports SMEs

HR Excellence Partners works with Australian SME owners to translate exactly this kind of regulatory change into practical, workable systems – policy suites, award-compliant contracts, position descriptions, psychosocial risk registers and pulse-check tools – without the overhead of an in-house HR team.

If you’d like a second set of eyes on where your business sits against this 90-day plan, get in touch.

Vas Papadopoulos
Principal Consultant
HR Excellence Partners
vas@hrexp.com.au
hrexcellencepartners.com.au

References

1. Fair Work Ombudsman, “Minimum wages increase from 1 July 2026” — https://www.fairwork.gov.au/about-us/workplace-laws/annual-wage-review/annual-wage-review-2026
2. Ministers’ Media Centre (Dept. of Employment and Workplace Relations), “Award and minimum wage workers to receive at least 4.75% pay increase” — https://ministers.dewr.gov.au/rishworth/award-and-minimum-wage-workers-receive-least-475-pay-increase
3. WorkSafe Victoria, “New regulations make psychological health a priority” — https://www.worksafe.vic.gov.au/news/2025-12/new-regulations-make-psychological-health-priority
4. WorkSafe Victoria, “Psychological health” (Occupational Health and Safety (Psychological Health) Regulations 2025) — https://www.worksafe.vic.gov.au/psychological-health
5. Fair Work Ombudsman, “Employment contracts” — https://www.fairwork.gov.au/employment-conditions/employment-contracts
6. PD Legal, “Fair Work Act Changes in Australia: Employer Compliance and Legal Risks” — https://www.pdlegal.com.sg/fair-work-act-changes-australia-employer-compliance-legal-risks/
7. Kennedys Law, “Victoria’s new OHS regulations on psychosocial health” — https://www.kennedyslaw.com/en/thought-leadership/article/2025/victoria-s-new-ohs-regulations-on-psychosocial-health/
8. Safe Work Australia, “Key Work Health and Safety Statistics Australia 2025 now available” — https://www.safeworkaustralia.gov.au/media-centre/news/key-work-health-and-safety-statistics-australia-2025-now-available
9. Safe Work Australia, “Key Work Health and Safety Statistics Australia 2025” (full report, data portal) — https://data.safeworkaustralia.gov.au/insights/key-whs-statistics-australia/latest-release
10. MinterEllison, “Victoria’s new psychosocial health regulations start December 2025” — https://www.minterellison.com/articles/victorias-new-psychosocial-health-regulations-2025